LPG - today's catalyst...

According to global statistics, the worldwide Liquid Petroleum Gas
production grew by approximately by three percent between 2005 and 2006,
and it continues to do so. In parallel the consumption growth of LP gas
was driven by the Asian region at a rate of 3.4%, according to
statistics in many reports published in the web, indicate. The cost of
shipping continued to increase in 2007 and eventually the contract and
spot prices of LP Gas rose sharply last year reaching US$ 900.

As in 2006, the rising prices in oil and gas were one of the most
significant features of the LP gas landscape. Crude oil prices reached
record highs, which resulted in substantial increases in the price of LP
Gas. It is expected that this phenomenon will continue for hydrocarbon
based fuels. In tandem with increasing prices there is a growing
awareness of environmental issues amongst consumers and governments, to
promote, amongst other users, LP gas as a low emission, clean, modern
energy which can play an important role in delivering immediate
reductions in vehicular emissions and pollution.

One of the great business opportunities for the LPG industry
worldwide emerges out of responses to climate change. The global demand
for energy is growing at a rapid pace and the variety of ways of meeting
that demand has never been greater. In this regard LPG competes with
petrol and diesel in cars, with coal fired electricity and nuclear in
homes and with renewable energies such as solar, wind, ethanol and bio
diesel. LPG is not the perfect energy but it produces less CO2 emissions
than petrol and coal fired electricity and it offers important
advantages over renewable energies.

Increasing energy prices have been in the news almost as much as
climate change and the need for reductions in CO2 emissions. Given the
acceptance that global warming is real and having an impact on the
planet, there is an opportunity for efficient, low carbon fuels such as
LP Gas to grow. Even though LP gas is not carbon neutral, it has a far
lower impact on the climate than many other fuels since it is clean
burning and very efficient.

Most importantly the usage of LP gas can promote the health of women,
mainly housewives, because according to statistics 48.2% of the total
consumption of LP gas is for domestic purposes when women are in
constant contact, around the world.

According to the *World Liquefied Petroleum Gas Association* (WLPGA),
more than 9 million vehicles in 38 countries currently operate on LP
gas. It is not a new idea: Propane-powered vehicles have been around for
decades. The benefits include "reduced emissions", quoted by WLPGA as
"50% less carbon monoxide, 40% less hydrocarbons, 35% less nitrogen
oxides (NOx) and 50% less ozone forming potential compared to gasoline".
With government incentives and tax breaks figured in, LP gas used in
cars (known as "autogas") can be much cheaper than gasoline. Even
without the incentives, it is usually much cheaper. Autogas is a
high-octane fuel, offering performance comparable to gasoline and
diesel, and many owners claim that autogas runs more smoothly, resulting
in less wear and tear on engine components.

What is LPG?

LP Gas is propane or butane or a mixture of the two. It is always
present as a product of oil refining and also is always present
naturally in natural gas (methane) fields and crude oil fields. It can
be distributed in relatively cheap, small containers and used for
cooking, heating, lighting and commercial/industrial activities. LP Gas
has significant health, safety and environmental benefits compared to
traditional solid fuels, such as wood/biomass and coal, or other refined
fuels such as kerosene or paraffin.

There are two LP gases that can be stored in liquid form with only
moderate pressurization - "propane" and "butane'. "Isobutane", which has
the same simple chemical formula as butane, but has a different chemical
structure. Usually, butane and isobutane are mixed with propane in
various proportions, depending on the intended use of the fuel.

"Propane" is particularly useful as a portable fuel because its
boiling point is minus 44 Fahrenheit (minus 42 Celsius). That means that
even at very low temperatures, it will vaporize as soon as it is
released from its pressurized container. This results in a clean-burning
fuel that doesn't require a lot of equipment to vaporize it and mix it
with air. A simple nozzle will suffice.

"Butane's" boiling point is approximately 31 F (-0.6 C), which means
it will not vaporize in very cold temperatures. This is why butane has
more limited uses and is mixed with propane instead of being used by
itself.

A single pound of propane can generate 21,548 BTU (British Thermal
Units) of energy, while butane can produce 21,221 BTU per pound. For
comparison, here is how LP Gases stack up to other fuels in terms of
energy:

Propane: 21,500 BTU per pound

Butane: 21,200 BTU per pound

Gasoline: 17,500 BTU per pound

Coal: 10,000 BTU per pound

Wood: 7,000 BTU per pound

LP gas is a fossil fuel, like oil and natural gas. It can be refined
from oil and natural gas the same way gasoline is refined from crude
oil. While most energy companies are not focused on LP gases, they
produce them nonetheless because they are a byproduct of the refining
process for other fuels.

LP gases are separated from crude oil as well. The refining process
produces about a 3 percent yield of LP gases, although if refineries
were retooled to focus on LP-gas extraction, that number could be as
high as 40 percent.

Availability of fuel, canister size, financing of first costs and
refilling costs and transportation are constraints to LP Gas use by the
poor, whether urban or rural.

Because it's a clean fuel:

* It burns cleanly

* No smoke or residual particulate matter

* Relatively low pollutant emissions

* Low Green House Gas emissions

* Helps fight deforestation by substituting "traditional fuels"

Did you know that....

Smoke from indoor cooking fires kills 1.6 million (mainly small
children) every year,

* Smoke in the home kills more people than malaria does, and almost
as many as unsafe water and sanitation

* Smoke in the home is the fourth greatest cause of death and disease
in the world's poorest countries

LP Gas supply is increasing and innovative applications for LP Gas
can be found in both the developed and developing world.

The energy landscape remains challenging, especially given increasing
prices and growing emphasis on environmental issues. However, LP Gas has
an important role to play in lowering emissions and reducing pollution.
A switch to autogas today will make a lasting, immediate impact on our
planet.

Low cost LP gas from CPC soon

The Ceylon Petroleum Corporation is in the
process of issuing LP gas for domestic consumption very soon.

The Ceylon Petroleum Corporation at present
produces 50 - 55 tonnes of liquid petroleum gas at their refinery. It
was sold wholesale to public and the private sectors. Deputy General
Manager of CPC, Cyril Suduwella speaking to the Sunday Observer said the
Institute has the capacity to issue 4000 cylinders of 13.5kg per day.

According to him the CPC have allocated 25
million rupees from their own funds to initiate the project. The CPC
have forwarded the papers for Cabinet approval for another 250 million
rupees, to further strengthen and expand the project.

"We are in the process of calling for tenders
for evaluation and then to purchase the required machinery. We will be
bringing in the top quality gas cylinders in the world," he added.

"We are in the process of doubling the LP gas
production and very soon we can bring the production level up to 8000 -
9000 cylinders per day," he said.

Mr. Suduwella acertains that they are capable
of selling LP gas to the public at a lower price than the existing
market rates.

Local market

Local private traders in the market are of the
view that the current prices of gas can not be reduced now because the
two competitors have narrowed down their profits to sell LP gas at the
lowest possible rates.

Recently Laugfs Gas Chairman W.K.H. Wegapitiya,
speaking to a Colombo Sunday paper said that if the CPC utilizes its
imports to market its own product then Laugfs Gas would have no choice
but to import 100% of its base product causing retail prices to soar.

Finance Director of Shell Gas Lanka Ltd. Rimoe
Saldin said if the market can become more liberal they would definitely
welcome more competition. More Competitions in the market can bring in
more benefits to consumers.